It’s bottleneck gridlock

The large sign on Moorebank Avenue just off Sydney’s main highway leading to Melbourne warns drivers that it is a military road. But it’s the commercial and political crossfire that is making it so perilous to navigate.

The Department of Defence owns or leases land on both sides of what started as a modest access road for army facilities. Now the area of Moorebank, about 40 kilometres south-west of the CBD, has become the key to solving one of Sydney’s worst freight and traffic bottlenecks. That makes it an essential element in improving national productivity – not to mention drivers’ frayed tempers.

More than a million of the containers now coming in and out of Port Botany by truck could travel more quickly and efficiently by rail to a big new terminal at Moorebank, before transferring to trucks closer to the usual destination of Sydney’s west.

The Howard government formally backed the concept of what is effectively an inland port back in 2004. Infrastructure Australia gave its blessing in 2009.

Since then, traffic gridlock compounded by trucks moving ever-increasing amounts of freight on highly congested roads near Port Botany and the airport has only made the case more compelling.

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One problem is that there are two competing proposals on two different blocks of land literally across the narrow road from one another. The larger one belongs to the federal government and the other to a private sector consortium consisting of
QR National
and
Chris Corrigan
’s Qube Logistics, obviously experienced in building and running rail links, port shuttles and logistics operations.

Canberra, led by a passionate advocate in Transport Minister
Anthony Albanese
, is determined to proceed with its own plan to develop a larger, 220-hectare site opposite which now houses the School of Military Engineering. This school will now be relocated to the Holsworthy army base several kilometres away at a cost of about $880 million plus substantial remediation of the original land. The sod-turning for the new site is scheduled for Monday, although the shift won’t be finalised until 2015.

Canberra is due to announce the board of a government business enterprise to oversee the project next week, chaired by the former head of Sydney Water and NBN Co director,
Kerry Schott
.

But the government insists Moorebank will still be built and operated by the private sector after a competitive tender process and that it will eventually be sold at a profit for taxpayers. By then, it should also include a terminal for interstate rail traffic which current demand does not yet support as a commercial proposition – and won’t for nearly two decades.

Representatives of the Moorebank Project Office and its consultants, Greenhill Caliburn, are in New York this week talking to potential investors and operators of similar terminals in the US.

But even if all goes according to government plan, the earliest its version of the Moorebank project could start operating would be late 2017. Given container freight volumes are growing at 7 per cent a year and are expected to accelerate, that’s a long five years to wait just to get started. Its critics in business also suggest a 2020 date is far more realistic and that it would end up costing far more than the government acknowledges.

In contrast, the alternative Corrigan and QR project is promising it can get the crucial first phase – the port link – operating with an open access terminal by 2014 at no cost to taxpayers. Its critics in government say this timetable is impossible.

This is in part because it would require the Department of Defence to move out early from some of the warehouses on land it leases from Qube and QR. Corrigan and his team retort that Defence is willing to negotiate but is being blocked by the rest of the government. Canberra is also refusing the consortium access to land it also owns to build a narrow 430-metre corridor it needs for a rail connection.

Confused? Even the Business Council of Australia sounds bemused by the claims and counter claims over an issue of such clear national economic significance.

BCA president
Tony Shepherd
strongly backed the private-sector proposal in a letter to Albanese last April. By October, after briefings from the Department of Finance, he wrote a new letter to the Prime Minister supporting the commonwealth for “the most cost effective and practical strategy’’. Albanese was as delighted as Corrigan was furious.

Now Shepherd tells The Australian Financial Review that he thinks both sides should be talking to one another and co-operating to ensure the best outcome for the project and for taxpayers. Just as Infrastructure Australia initially proposed should happen. Qube and QR insist they remain keen to negotiate with Canberra. The government says Qube and QR can tender for the project next year, along with any one else interested. Next stop, an election which may alter all targets in range. Crossfire to continue.